Demonstrating value for Money in a DLO

Rob McNaughtonRob McNaughton

DLO Work Selection

Why does it matter?Why does it matter? Because of DLO characteristicsBecause of DLO characteristics

Very inelastic costsVery inelastic costsSingle dominating customer – inelastic Single dominating customer – inelastic

incomeincomeSingle statusSingle statusRestrictions on Terms and conditionsRestrictions on Terms and conditions

• Working hoursWorking hours• Bonus and incentivesBonus and incentives

What kind of work are suitable?

Stable income over medium / long termStable income over medium / long term Work that is not best undertaken by Work that is not best undertaken by

sequence production, e.g. mass kitchenssequence production, e.g. mass kitchens Work where general building sub-Work where general building sub-

contracting is availablecontracting is available

What is suitable?

YesYes Responsive and Responsive and

voidsvoids Minor works and Minor works and

batched worksbatched works Out of sequence Out of sequence

refurbishment – refurbishment – may be butmay be but

NoNo Major sequence Major sequence

refurbishmentrefurbishment External paintingExternal painting M&E cyclicalsM&E cyclicals

What about external contracts

The Inspector questionsThe Inspector questions Why is this advantaging your organisation?Why is this advantaging your organisation? How do you deal with customer conflicts?How do you deal with customer conflicts? What happens when it ends?What happens when it ends?

My advice – keep it as a marginal activity with My advice – keep it as a marginal activity with community benefitcommunity benefit

Value for Money

What does not work:What does not work: Average repair cost benchmarkingAverage repair cost benchmarking Baskets of ratesBaskets of rates Void cost benchmarkingVoid cost benchmarking

What may not workWhat may not work Competitive tenderingCompetitive tendering

Value for Money

Cost efficiency only – responsiveCost efficiency only – responsive Cost efficiency – voidsCost efficiency – voids DemandDemand PerformancePerformance Customer satisfactionCustomer satisfaction

05101520253035404550556065707580859095100105110115120125130

25 35 45 55 65 75 85 95

Low value - Percentage of total jobs - High value

Ave

rage

job

cost

s (£

) Responsive Repair Average Costs

Voids -1

You cannot directly compare void costsYou cannot directly compare void costs Void rates are tied to responsive ratesVoid rates are tied to responsive rates You must capture all void costsYou must capture all void costs

Voids -2

You can compare where the money goes:You can compare where the money goes: SecuritySecurity Cleaning and clearanceCleaning and clearance Safety checkingSafety checking RepairsRepairs InvestmentsInvestments Re-decorationsRe-decorations Re-chargesRe-charges OtherOther

Demand

Responsive (excluding gas) between 3 and Responsive (excluding gas) between 3 and 3.5 jobs per unit per annum3.5 jobs per unit per annum

Voids – not relevantVoids – not relevant

Performance - responsive

Average time to complete all jobs (less than Average time to complete all jobs (less than 8 days)8 days)

Total % of appointments made of all jobsTotal % of appointments made of all jobs Total % of appointments met by DLOTotal % of appointments met by DLO Jobs completed at first visitJobs completed at first visit Jobs that go over 20 working daysJobs that go over 20 working days

Performance - Voids

3 days to commission3 days to commission 2 days to hand back2 days to hand back £250 per day in the middle£250 per day in the middle

E.g. £2000 void = 3 days plus 2 days plus E.g. £2000 void = 3 days plus 2 days plus 2000/250 (8days) = 13 days2000/250 (8days) = 13 days

Customer Satisfaction

I don’t care about satisfied customersI don’t care about satisfied customers I care about less than fully satisfied I care about less than fully satisfied

customerscustomers

Why was it not perfect?Why was it not perfect? What can we do about it?What can we do about it?

What Demonstrates Value?

A strategyA strategy Price testing Price testing Managing the key costsManaging the key costs Managing the (right) budgetManaging the (right) budget Performance measurementPerformance measurement Performance managementPerformance management Benchmarking activelyBenchmarking actively

Performance Management

The jobs – measure the right things and do The jobs – measure the right things and do something with the outputsomething with the output

The people – for productive staff this is a The people – for productive staff this is a daily / weekly eventdaily / weekly event

I am an Inspector

Did you do what I told you to do last timeDid you do what I told you to do last time Is there a vfm strategy?Is there a vfm strategy?

Is it being used?Is it being used? Have you some validation of cost efficiency?Have you some validation of cost efficiency?

Competitive testCompetitive test Meaningful cost comparisonsMeaningful cost comparisons

Do budgets and spend correlate?Do budgets and spend correlate? Is the written policy the one that operates?Is the written policy the one that operates?

I am an Inspector

Do you understand demand?Do you understand demand? Do you involve tenants and use customer Do you involve tenants and use customer

feedback?feedback? Do you use monitoring information?Do you use monitoring information? Do you look outside?Do you look outside? Is your DLO scrutinised (cliented)?Is your DLO scrutinised (cliented)? Are you managing business risk?Are you managing business risk?

Ask yourselves

Why do we use a Schedule of Rates / open Why do we use a Schedule of Rates / open book?book?

Do we know the history?Do we know the history? Is our income secure for the next five years?Is our income secure for the next five years? Do operatives know what performance is Do operatives know what performance is

expected of them?expected of them? Can your supervisors supervise?Can your supervisors supervise?

Ask yourselves

Do you know where you are making surplus / lossDo you know where you are making surplus / loss Has everyone a grasp of the basic statisticsHas everyone a grasp of the basic statistics

How many jobs – day / week / month / year?How many jobs – day / week / month / year? How much?How much? How we do things?How we do things?

Have we got records that make show that this Have we got records that make show that this operation is managed?operation is managed?

Tailpiece

Delivering service is not a battle it’s a warDelivering service is not a battle it’s a war Action plans win battlesAction plans win battles Agendas win warsAgendas win wars

‘‘Why’ and ‘how’ are your greatest weaponsWhy’ and ‘how’ are your greatest weapons